More bad news for Bill Ackman and his huge short position on nutritional supplements marketer Herbalife Ltd. (NYSE:HLF) -- the shares show no signs of slowing down. Today, in fact, the stock has popped 3.7% at $52.46, after a U.S. federal judge dismissed a lawsuit accusing the company of misleading investors.

Options traders, on the other hand, are welcoming HLF's advance. During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has racked up a call/put volume ratio of 1.80 -- with long calls nearly doubling puts. Also, this ratio ranks in the bullish 95th percentile of its annual range.

Of course, it's possible some of these speculators scooped up calls -- especially at out-of-the-money strikes -- to protect their short stock positions against a major upside move. After all, a lofty 28.2% of HLF's float is sold short, representing more than three weeks' worth of trading activity, at typical volumes.

Uncovered shorts, meanwhile, are likely reeling given the equity's technical tenacity. Year-to-date, HLF has soared more than 39%, and additional gains may be in store, with the company scheduled to report earnings after the close next Wednesday, Aug. 5.

Specifically, in the session following Herbalife Ltd.'s (NYSE:HLF) early May results, the stock exploded 16.5% higher. Moves of this magnitude are not usual -- over the past eight quarters, the shares have averaged an 8.6% swing in either direction, in the day subsequent to earnings. This time around, the options market is pricing in a 14% post-earnings move, based on near-term at-the-money straddle data.

Notorious short seller Citron Research earlier issued a report questioning semiconductor stock Ambarella Inc (NASDAQ:AMBA) -- namely, CNBC pundit Jim Cramer's optimistic outlook for it, an analysis the firm calls "sloppy." Since the document was released, Cramer has taken to Twitter to issue a number of replies, including:

There is a short report on $AMBA that makes false claims today about my view on $MLNX. I said sell 9/13/2012 at 108. A pack of lies

— Jim Cramer (@jimcramer) July 29, 2015

AMBA traders have issued their own response, sending the shares down 1% to $118.04. However, the stock still remains 133% higher year-to-date -- and less than 10% off of its July 23 record high of $129.19.

In the options pits, meanwhile, bulls are betting on a quick bounce. In fact, calls are trading at 1.3 times the average intraday pace, and have a healthy lead over puts. Most active is AMBA's weekly 7/31 118-strike call, where all signs suggest new positions are being purchased for a volume-weighted average price (VWAP) of $2.61.

Based on this average entry price, breakeven for today's call buyers is $120.61 (strike plus VWAP). Profit will accrue on a move north of here, while losses are limited to the initial premium paid, should AMBA settle south of the strike at Friday's close -- when the weekly series expires.

Broadening the scope reveals put buyers have been active in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), AMBA's 50-day put/call volume ratio of 0.88 rests in the 80th percentile of its annual range. Simply stated, puts have been bought to open over calls at a quicker-than-usual step in recent months.

While it's possible some of the recent put buying -- particularly at out-of-the-money (OOTM) strikes -- could be a result of shareholders protecting paper profits, it's also a reasonable assumption that some of today's OOTM call buying is at the hands of short sellers hedging against an end-of-week rebound. Currently 26.3% of Ambarella Inc's (NASDAQ:AMBA) float is sold short.

Analysts are weighing in today on software provider Citrix Systems, Inc. (NASDAQ:CTXS), bakery chain Panera Bread Co (NASDAQ:PNRA), and IT security firm VASCO Data Security International, Inc. (NASDAQ:VDSI). Here's a quick look at today's brokerage notes on CTXS, PNRA, and VDSI.

• CTXS is up 9.3% at $76.09 -- and earlier touched a nearly two-year high of $76.70 -- after the company made a series of announcements. For starters, CEO Mark Templeton is retiring, as the company enters into an agreement with financial firm Elliott Management Corporation. On top of this, Citrix Systems, Inc. announced second-quarter earnings and a promising full-year outlook. Analysts have been quick to re-evaluate their positions. No fewer than six brokerage firms raised their price targets on the shares, with Baird upping its opinion to "outperform." The majority of options traders seemingly already had a bullish outlook. CTXS' Schaeffer's put/call open interest ratio (SOIR) of 0.72 is only 10 percentage points from an annual low. Plus, during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly four calls for every put. 


• After reporting second-quarter earnings and strong current-quarter same-store sales figures, PNRA was on the receiving end of some positive analyst attention. Both Barclays and Piper Jaffray raised their price targets to $215 and $208, respectively. The latter mark actually represents the stock's intraday -- and all-time -- high. On last glance, Panera Bread Co was 8.7% in the black at $203.18, and it could move higher if other brokerage firms decide to upgrade their opinions. Eleven of the 20 analysts tracking PNRA still say it's only a "hold" -- even though it's added roughly 34% in the past 12 months. 


• VDSI is the outcast of this bunch -- having an even worse day than Twitter Inc (NYSE:TWTR) -- with the shares last seen 20.6% lower at $21.07, and on pace for their largest one-day drop since October 2012. After a poorly received turn in the earnings confessional, VDSI has seen Dougherty lower its price target to $30 from $35. VASCO Data Security International, Inc. has already trailed the S&P 500 Index (SPX) by over 13 percentage points in the past 20 sessions, and is now on the verge of closing below its 10-month moving average for the first time since March 2014. This may have been the downside move short sellers were waiting for. More than 37% of VDSI's float is sold short, which would take over nine sessions for bears to buy back, at the stock's normal trading pace. 

For other stocks in analysts' crosshairs, read Analyst Upgrades: Gilead Sciences, Inc., Buffalo Wild Wings, and FireEye Inc, plus Analyst Downgrades: Yelp Inc, Akamai Technologies, Inc., and Peabody Energy Corporation​. 

By Howard Schneider and Michael Flaherty

WASHINGTON, July 29 (Reuters) - The U.S. economy and job market continue to strengthen, the Federal Reserve said on Wednesday, leaving the door open for a possible interest rate hike when central bank policymakers next meet in September.

Following a two-day policy meeting, Fed officials said they felt the economy had overcome a first-quarter slowdown and was "expanding moderately" despite a downturn in the energy sector and headwinds from overseas.

The central bank nodded in particular to "solid job gains" in recent months.

"On balance, a range of labor market indicators suggest that underutilization of labor resources has diminished since early this year," the Fed said in a policy statement that kept rates unchanged.

That language marks an upgrade in its view of labor conditions since its June meeting, when it said labor slack had "diminished somewhat."

The statement may strengthen expectations of a rate hike at the Fed's September meeting. The central bank has kept rates at a near-zero level since December 2008 as part of its effort to spur the recovery from the 2007-2009 financial crisis.

An eagle tops the U.S. Federal Reserve building's facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst

However, the Fed didn't give a clear signal on its rate plan. Instead, it said it wanted to see "some further improvement in the labor market," and gain more confidence that low inflation will rise to its 2 percent medium-term target.

The policy statement also retained language saying that risks are "nearly balanced," suggesting the Fed is still more concerned about a new economic downturn rather than of rapidly rising inflation.

Central bank officials and market analysts have been waiting to see if weak growth in the first part of the year signaled the beginning of the end of an economic expansion, or merely a pause.

The verdict now seems firm.

Most economists forecast that U.S. economic growth will pick up after a lackluster first half and that the Fed will begin its monetary tightening in September, according to a Reuters poll published last week.

And Wall Street's top banks still target September as the most likely time for the Fed to begin its monetary tightening, according to another Reuters poll published earlier this month.

Though inflation remains weak, the statement portrayed an economy that continues to tighten, with a 5.3 percent unemployment rate and steady job creation.

With no meeting scheduled in August, the Fed will have two months of data to analyze before deciding whether to hike rates for the first time since 2006.

There were no dissents.

(Reporting by Howard Schneider; Editing by Paul Simao)

((howard.schneider@thomsonreuters.com;))

When I think about people who might work at a Starbucks Corporation (NASDAQ:SBUX) cafe, I think of a skinny-jeans-wearing hipster. Or maybe some insecure high school kid. But definitely not former NBA All-Star Vin Baker.

Which is really too bad because, apparently, Baker is currently training to become a SBUX manager in Rhode Island. "In this company there are opportunities for everyone. I have an excellent situation here at Starbucks and the people are wonderful," said the power forward-turned-barista.

The story sounds crazy at first-blush, but it's really not. There was a time when professional athletes worked offseason jobs like the rest of us. More recently, you might remember that former NFL kick returner Michael Lewis was a beer delivery man for Anheuser Busch Inbev SA (ADR) (NYSE:BUD), prior to latching on with the New Orleans Saints, while Super Bowl XLIX hero Malcolm Butler took orders at a Popeyes Louisiana Kitchen Inc (NASDAQ:PLKI) restaurant.

And it's not just ex- and pre-professional athletes that work hourly jobs. Last offseason, Baltimore Ravens safety Matt Elam picked up some shifts at a Finish Line Inc (NASDAQ:FINL) location in Florida. When asked why, Elam said he's trying to get experience so he can one day open his own sports merchandise shop.

Whatever the case may be, I hope these athletes are buying into their respective companies' stock plans -- especially Baker. Starbucks Corporation (NASDAQ:SBUX) has surged 40.5% year-to-date at $57.63, and hit a record high of $59.31 last week following an earnings beat.

Over the last couple of weeks, there have been two companies that added at least $20 billion to their market cap in one day. I'm talking about Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOGL). I wondered if this created any sort of opportunity going forward. When this happens, is there a tendency to pull back some or continue higher? This week, I'll look back at similar instances when large-cap stocks made huge one-day moves, and see how they did going forward. 

Big-Caps Make Big Gains: For this this study, I went back to the beginning of 2010 and found stocks that returned at least 8% on a single day, and added at least $10 billion in market cap. Before Amazon and Google recently accomplished this, there had been 31 other instances. Below is a table summarizing how they performed after the big daily gain. The stocks tended to struggle in the short term.  After a month, the stocks had lost an average of 2%, showing positive returns less than half the time. Also, these stocks beat the S&P 500 Index (SPX) less than half the time through all time frames. Looking at these numbers, it wouldn’t be surprising if Amazon and Google struggled a bit over the next few weeks. 

Amazon & Google Past Instances: Here are the past instances of these two specific stocks gaining 8% in a day and adding at least $10 billion in market cap. First, the table below shows four prior occurrences for Amazon. I included corresponding SPX​ returns to see what the broad market was doing at the same time. As you can see, the three-month returns for Amazon are quite good after each of these occurrences. The last time it happened, just last April, Amazon gained almost 19% over the next three months, despite the S&P 500 actually declining. 

Similar to the table above, here are the results for Google in the past. The scenario described above has happened three other times for Google, with the results going forward not being as bullish as for Amazon. The last time Google gained 8% and $10 billion in market cap was October 2013. Google did very well in the next three months, gaining 15% vs. the S&P 500 gain of 5.7%. After the July 2011 occurrence, however, Google and the SPX saw substantial three-month declines, and following the October 2010 move, GOOGL underperformed the broader market. 

The Federal Open Market Committee (FOMC) will release its latest policy statement at 2 p.m. ET today, and while expectations are low that the central bank will announce an interest rate hike this afternoon, traders will be looking for hints on a possible September rate hike -- the first the market will have seen since June 2006.

Over the past 40 years, Schaeffer's Senior Quantitative Analyst Rocky White found 10 occurrences where the Fed raised interest rates for the first time in at least a year -- and broke down the numbers to see how the S&P 500 Index (SPX) historically reacted in the wake of these decisions.

Looking at the charts below, it appears the SPX experiences short-term struggles in the wake of the interest rate hikes. Specifically, the benchmark averages a one-month loss of 1.4%, and is positive just 30% of the time. Going out one year, however, it appears the market tends to stabilize, as the SPX averages a 12-month gain of 10.8%, and is positive 80% of the time.

​ ​

Here's another perspective. It plots the price action of the S&P 500 Index along with the federal funds target rate since 1975.

Drilling down on specific sectors, energy turned in outperformance in both the short-and long-term following the 1999 and 2004 rate hikes -- with the Energy Select Sector SPDR ETF (XLE) notching one-month gains of 1.9% and 3.1%, respectively. These widened to a respective 9.4% and 42.1% when going out one year.

On the flip side, financials saw a short-term drop following interest-rate adjustments in 1999 and 2004, with the Financial Select Sector SPDR ETF (XLF) shedding 6.1% and 2.1%, respectively, in the ensuing one-month period. Going out one year, this price action diverges, with the XLF surrendering 6.7% in 1999, and adding 3.8% in 2004.
​

Markets were mixed in Asia today, even as Chinese stocks saw their first gains in three days. Specifically, the Shanghai Composite jumped 3.4%, just two sessions after its worst sell-off in years. In Hong Kong, the Hang Seng added 0.5%. On the other hand, the Nikkei gave back early gains after manufacturing giant Fanuc offered a disappointing 2015 outlook; the Japanese index closed 0.1% lower. South Korea's Kospi also ended in the red, giving back 0.1% as drugmakers suffered heavy losses.

Stocks in Europe are struggling to pick a direction ahead of the Federal Open Market Committee's (FOMC) latest policy decision this afternoon. Traders are also digesting earnings from several prominent companies, with Barclays, Total, and Peugeot all on the rise after their quarterly reports. London's FTSE 100 and France's CAC 40 were higher at last look, with respective gains of 0.6% and 0.2%. Elsewhere, Germany's DAX is hovering just below breakeven, losing 0.02%. 

Want to go short China? It's going to cost you a bit. This, from Bloomberg:

"At the current cost to borrow shares of the biggest U.S. exchange-traded fund investing in mainland stocks, short sellers need the equivalent of a 40 percent annualized drop just to break even, according to Markit, a London-based research firm. The 28 percent plunge in the Shanghai Composite Index from its bull market high and volatility at the highest level in 18 years have made it more expensive than ever to profit from declines in the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF as investors push bets against the fund to near a record."

Not to mention that it's not exactly the tightest market I've ever seen. But let's take a look. 

As I type, the Deutsche X-Trackers Harvest CSI 300 China A-Shares ETF (ASHR) is trading at $39.45. The September 40 calls are the tightest nearby quote, so we'll use that line to price the reverse/conversion market. They're $1.90 bid, $2.10 ask, while the puts are $4.10-$4.60. 

Add them up, and you can synthetically buy ASHR at $38 if you buy the calls at $2.10 and sell the puts at $4.10. If you could short the ETF itself at $39.45, you could lock in $1.45! But alas, you can't actually short it there… or, rather, you can, but you'll have to pay some hefty borrowing costs. 

If you assume you break even on this -- not an accurate assumption, but bear with me for a sec -- then that implies it will cost you $1.45 to borrow ASHR between now and September expiration.

That's 3.67%. Not so terrible, right? 

Well, it's only 52 days, so we have to annualize it. And when we do that, it comes out to 25.7% 

But unfortunately, that assumes you break even. You don't, necessarily. For one thing, the borrowing costs are not constant; this just estimates the ultimate number. It could go much higher. What's more, you run the risk of getting bought in on your actual stock short, and that has somewhat open-ended risk attached to it. 

There's an alternative, though. We can create a synthetic short via options. To that, we buy the puts at $4.60 and sell the calls at $1.90, effectively shorting the shares at $37.30. That's 5.45% below ASHR now, an annualized drop of 38.25%. That's presumably where that Bloomberg number comes from. 

So, even if we use the midpoint of the two, yeah, it's pricey to short here and essentially assumes a big drop. And it's likely you can't always borrow shares.

On the other hand, if you want to buy the shares, might as well use the options board! You don't earn the "income" of loaning out your shares, but your broker/clearing firm is likely pocketing them anyway. 

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.

Analysts are weighing in today on drugmaker Gilead Sciences, Inc. (NASDAQ:GILD), sports bar Buffalo Wild Wings (NASDAQ:BWLD), and cybersecurity specialist FireEye Inc (NASDAQ:FEYE). Here's a quick roundup of today's bullish brokerage notes on GILD, BWLD, and FEYE.

• GILD is receiving a rush of positive attention, after the company blew past second-quarter earnings and sales expectations, and upped its full-year outlook. No fewer than seven analysts raised their price targets on the stock, with UBS setting the highest bar, at $138. However, J.P. Morgan Securities lowered its price target on Gilead Sciences, Inc. to $113 from $116. Ahead of the bell, the shares -- which settled at $113.07 yesterday -- are pointed 3.5% north, ready to add to their 20% year-to-date lead. GILD's bullish bandwagon is getting full. Twelve of 14 analysts rate the stock a "buy" or better, and its consensus 12-month price target of $124.47 stands in never-before-seen territory.


• The Street is cheering BWLD, as the restaurant chain's strong second-quarter same-store sales overshadow weaker-than-forecast profits. No fewer than five brokerages raised their price targets, with the most ambitious target of $220 courtesy of Cowen and Company. Buffalo Wild Wings has struggled in 2015, shedding 5% to land at $171.28 -- though it's poised to pop 9.2% this morning, thanks to the aforementioned drivers. The expected gap higher could have short sellers on edge. Over 13% of BWLD's float is sold short, representing more than one week of trading, at typical daily volumes.


• FEYE will not report earnings til tomorrow night, but that hasn't stopped Oppenheimer from boosting its assessment to "outperform" from "perform." The bullish note is well-deserved, considering the stock has soared almost 45% year-to-date to trade at $45.69, and recently flashed a bullish signal. FireEye Inc option bears could get burned. During the last two weeks across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FEYE has racked up a put/call volume ratio of 0.76 -- in the 98th percentile of its annual range. If the company has a strong showing in the earnings booth, an unwinding of all this pessimism could boost the shares. 
  

Want an even earlier advantage on the biggest news before the bell? Sign up now to get Schaeffer's Opening View delivered straight to your inbox!

Futures are pointed modestly higher this morning, as traders take a glass-half-full approach ahead of this afternoon's monetary policy update from the Fed. Meanwhile, among specific equities in focus are microblogging platform Twitter Inc (NYSE:TWTR), chemical concern Cytec Industries Inc (NYSE:CYT), and China-based e-commerce issue Alibaba Group Holding Ltd (NYSE:BABA).

• TWTR has a history of making big post-earnings moves, and it looks like today's price action will be no exception. The stock is down 11.6% in electronic trading, and could plumb all-time lows, as disappointing data on the company's user growth -- and a laundry list of challenges highlighted by interim CEO Jack Dorsey -- overshadows better-than-expected second-quarter earnings. Additionally, a number of brokerage firms lowered their price targets on the security. SunTrust Robinson, for example, cut its target price to $38 from $40, saying TWTR needs to prove itself, while J.P. Morgan Securities reduced its price target to $50 from $55, saying improved user growth will take time. Pivotal Research, meanwhile, bumped its price target up by $1 to $42 -- representing expected upside of 14.9% to last night's close at $36.54, and a move into territory not seen since late April.
  
  Today's projected move lower should please option traders. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Twitter Inc's 10-day put/call volume ratio of 0.49 ranks in the 90th annual percentile. In other words, puts have been bought to open over calls at a faster clip just 10% of the time within the past year.


• CYT is up 27.3% ahead of the bell -- and on its way to record-high territory -- after Belgium-based Solvay agreed to buy the firm in an all-cash deal valued at $5.5 billion, or $75.25 per share. On Tuesday, CYT settled the session at $58.39. Analysts, meanwhile, have taken the optimistic route toward a stock that's already up more than 26% year-to-date. Three-quarters of those following Cytec Industries Inc maintain a "strong buy" recommendation, with not a single "sell" to be found. Plus, the average 12-month price target of $65.60 sits above CYT's June 23 all-time high of $62.71.


• BABA has thrown the gauntlet at Amazon.com, Inc. (NASDAQ:AMZN), saying it will invest $1 billion into its Aliyun cloud computing division. The company hopes to expand its cloud reach in the Middle East, Singapore, Japan, and Europe -- and comes in the wake of last week's announcement that AMZN's successful cloud service helped it bank a second-quarter profit. On the charts, BABA has struggled in 2015, down 22.5% at $80.56 -- and is fresh off a July 7 record low of $76.21. Option traders have kept the faith, though, and at the ISE, CBOE, and PHLX, have bought to open 3.71 calls for each put over the past two weeks.

Want an even earlier advantage on the biggest news before the bell? Sign up now to get Schaeffer's Opening View delivered straight to your inbox!

Analysts are weighing in today on business review site Yelp Inc (NYSE:YELP), cloud concern Akamai Technologies, Inc. (NASDAQ:AKAM), and coal company Peabody Energy Corporation (NYSE:BTU). Here's a quick roundup of today's bearish brokerage notes on YELP, AKAM, and BTU.

• YELP has plunged 27.5% in early trading at $25.96 -- and hit a two-year low of $23.97 -- as the company's reduced full-year earnings outlook draws the ire of Wall Street. Specifically, Raymond James and Cowen and Company downgraded their ratings to "market perform" from "outperform," with the latter also slashing its price target to $25 from $55. In fact, 15 other brokerages lowered their price targets on Yelp Inc. This could be bad news for traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the last 10 weeks, YELP has accrued a call/put volume ratio of 3.44 -- higher than all but 1% of comparable readings from the previous year. An unwinding of this optimism could pressure the shares even lower.


• A second-quarter earnings miss and weaker-than-expected third-quarter forecast are weighing on AKAM. Adding insult to injury, Canaccord Genuity, Craig-Hallum, and D.A. Davidson each lowered their price targets. As such, the stock has opened at a 6.9% loss, trading at $68.59 -- below a recent level of support in the $69-$70 area. Over at the ISE, CBOE, and PHLX, traders have been betting bearishly on Akamai Technologies, Inc. The stock's 50-day put/call volume ratio of 0.53 rests near the top quartile of its 52-week range.


• BTU has charted a steady path lower since April 2011, pressured in recent months by its descending 20-day moving average. The downtrend is continuing this morning, with the stock off 2.5% at $1.18 -- after touching an earnings-induced all-time low of $0.99 yesterday. Weighing on Peabody Energy Corporation are price-target cuts at BMO (to $1 from $2) and Deutsche Bank (to $0.90 from $1.30). Amid this long-term swoon, short sellers have been piling on. Over 39% of BTU's float is sold short. Elsewhere on the sentiment front, two-thirds of analysts rate the stock a "hold" or worse.

Want an even earlier advantage on the biggest news before the bell? Sign up now to get Schaeffer's Opening View delivered straight to your inbox!